Future outside Serbia takes shape for Kosovo

PRISTINA, Serbia (Reuters) - Kosovo will gain access to international institutions under a U.N. package that Germany and Britain say will lead to independence for the breakaway Serbian province.

A plan to be presented to major powers on Friday is expected to "advocate independence for Kosovo but with limits on its sovereignty," German deputy foreign minister Gernot Erler told Reuters in Berlin.

Independence is demanded by the 90-percent ethnic Albanian majority in Kosovo, which was occupied by NATO in 1999 to end a counter-insurgency war and has been run by the United Nations ever since. Serbia insists it must retain sovereignty.

In the Kosovo capital, Pristina, British Foreign Office political director John Sawers said the six Contact Group powers agreed a solution "should be acceptable to the great majority of the people of Kosovo, and I think that speaks for itself."

Political and diplomatic sources, speaking on condition of anonymity, gave details of the proposal U.N. envoy Martti Ahtisaari would discuss with representatives of Russia, the United States, Britain, France, Italy and Germany on Friday.

It states that Kosovo should be given "the right to seek membership of international organizations and institutions."

A Western official said these could include the United Nations, the International Monetary Fund (IMF) and the World Bank although none were identified in the text of the document.

If it passes the U.N. Security Council, Kosovo would become Europe's newest independent state and the last to be carved from what was once Yugoslavia.

RIGHT OF VETO

Russia, a friend of Serbia's with the right of veto in the Security Council, says there can be no deal unless both sides agree. German Foreign Minister Frank-Walter Steinmeier said he expected "a solution which will not be vetoed by Russia."

Diplomats say Russia may block Kosovo's membership of the U.N. but access to the World Bank and IMF will in the long run prove more important to the poor territory.

Ahtisaari, who mediated months of largely fruitless talks between the two sides last year, was due to present his proposal on a visit to Serbia and Kosovo on February 2, after which a fresh round of meetings would be conducted.